I strongly recommend building a 2x4 stud wall instead of using furring strips, especially for the office. A 2x4 wall gives room for electric outlets and a stronger wall. Use pressure treated 2x4 for the sole plate.
Don't skip the drywall. Most panelling is made to go over drywall, not directly on the studs. Since you'll panel, you don't need to do a great job on the taping and mudding. Rock also provides some fire protection.
No matter what sealer you use on the walls, it won't last forever. What happens in 5 years? 10 years? If you do not have a moisture problem now, you don't need to seal the foundation. If you do have a moisture problem, the sealer is a TEMPORARY fix.